Why Gen Y Doesn't Care About Cars

Howard Tullman is the CEO of Chicago-based 1871, where, at the moment, 260 digital startups are building their businesses every day. He is also the general managing partner of G2T3V and Chicago High Tech Investors--both early-stage venture funds; a member of Mayor Emanuel’s ChicagoNEXT Innovation Council; and Governor Quinn’s Illinois Innovation Council. He is an adviser to many technology businesses and an adjunct professor at the Kellogg Graduate School of Management. @tullman

It’s not Gen Y’s fault that they don’t give a whit about cars. If you’re living in your parent’s basement with no job, buying a car isn’t at the top of your to-do list. If you’re flipping burgers for a living, gas prices, insurance premiums and lease payments (on top of your college loans), pretty much preclude purchasing that great-looking Prius.

This is why we’re seeing fewer and fewer kids rushing to the DMV on their 16th birthday. More than 25% of all Gen Y’ers don’t have a driver’s license. Almost 30% of 19 year-olds aren’t licensed to drive, even if they could afford the gas.

We’re witnessing the collision of a number of different factors that will have a seismic effect on the future of the auto industry. Gen Y may be leading the charge, but the upcoming changes will impact millions of businesses.

Emotional Ties

There was a time - not so long ago - when owning a car was part of our civic duty. Chevys hummed with “The Heartbeat of America.” We regarded our cars as concrete expressions of our individual identities and evidence of our status and station in life. Everyone knew a successful doctor, and knew he was successful because he drove a new Cadillac every year.

Today, if there’s any emotional attachment in our connection to our cars, it’s a negative one - our cars are too expensive, they’re maintenance and parking burdens, necessary evils, costly pollution machines, etc. We’d just as soon be rid of them. Where are the Jetsons and teleportation when we really need them?

Mechanical Abilities

Once upon a time, a significant portion of the population actually knew something about the insides of their cars and how to maintain them, because it was something they could learn in school. Today, auto shop, as well as most other vocational training, is almost entirely gone from public education.

Even if we were inclined to pop the hood and try to fix something, we’d have little or no chance of success. Everything in today’s cars is computer-controlled and completely integrated into the vehicle’s operating system. A layman has zero chance of doing anything but damage in trying to fix anything beyond a flat tire. For many of us, even a flat tire is a challenge.

Technical Constraints

We also used to be able to learn a good bit about our cars by hanging around the neighborhood gas station and watching the grease monkeys. Not today. And even less tomorrow, as fuel stations and independent garages simply won’t be able to afford the equipment or the people to repair the next generation of computer-controlled vehicles.

Economic Realities

The costs of owning a car keep increasing. Fuel, insurance, maintenance and leasing costs are just the beginning. Every city, county and state is piling on with additional compliance and regulatory costs. Parking isn’t free, either.

And as alternatives increase, the need and the desire to own your own car diminishes. For this generation, Zipcar’s slogan says it all: “The car for people who don’t want one.” There are shared ride programs, company-provided transportation plans and the old reliables: biking and walking. For those ages 18 to 34, the stats are impressive: driving is down 23%; biking is up 122%, and even walking is up by 37%.

Environmental Considerations

There is mounting pressure to examine and develop alternatives to fossil fuels and to construct additional large-scale public transportation systems. These movements are near and dear to Gen Y. They can be expected to employ their social networks, crowd-sourcing and crowd-funding tools to substantially increase their influence in these areas.

Political and Regulatory Changes

Finally, there are the politicians. Polluters are low-hanging fruit. We can expect initiatives from the Obama administration to increase restrictions and to raise fees and taxes in an effort to drive polluting vehicles off the roads.

Similarly, expect increasing regulatory attacks on gas-guzzlers in an attempt to get them off the highways. But many of these used cars are the only cars younger and less-affluent customers can afford. We can expect to see them disappear at an increasing rate.